Hidden Property Costs East Amherst NY

The majority of foreclosure auctions are conducted by the lien holder in the first mortgage position, but you need to check if that's the case for any property that interests you.

Local Companies

Buffalo Property Management > Queen City Property Solutions
716-408-3300
337 Pennsylvania Ave
BUffalo, NY
Spagna Goodman LLC
716 833-7368
1862 Colvin Blvd
Tonawanda, NY
Realty Usa
(716) 856-7107
361 Delaware Ave Ste 101
Buffalo, NY
Pearce & Pearce Co., Inc.
(716) 833-6600
900 Niagara Falls Blvd.
Buffalo, NY
Superior Business Systems
(716) 207-7638
31 Halwill Dr.
Amherst, NY
All Pro Home Inspection
716-772-2548
Serving Niagara & Erie Counties
Gasport, NY
Realty USA.Com
716 837-7500
2427 Sheridan Dr
Tonawanda, NY
Cipriano Inc Realtors
(716) 692-9464
58 Main St
Tonawanda, NY
Polis Realty Group Inc
(716) 881-1200
499 Franklin St
Buffalo, NY
Renewal Housing Corp.
(716) 837-7558
105 Kenville Rd.
Buffalo, NY
Data Provided by:
  

By James J. Saccacio, RealtyTrac Chief Executive Officer

If you buy a property at a foreclosure auction, you may end up forking out more than just the winning bid amount to own the property free and clear. That’s because some debts attached to the property — called liens — survive the auction and carry over to the new owner.


isToken

Foreclosure auctions provide some fantastic opportunities to purchase a property well below its market value as long as you’re familiar with the ground rules. One of those ground rules is to never bid on a property unless you’ve researched the title and are aware of any liens that you will have to pay off if you are the winning bidder. Although most liens are cleared by the auction, that’s not always the case, according to national real estate speaker and author T.J. Marrs.


"Although it may vary from state to state, for the most part all liens except property tax liens are cleared by the foreclosure process," he said. "Other than the property tax lien, the first mortgage lender is likely to receive first funds produced from the auction. Any remaining funds would then go to the second lien holder, third lien holder, and so on. Even the IRS is secondary to existing senior lien holders."


The order of the liens is determined by the date those liens were recorded. If a second lien holder forecloses on the property, the first lien will typically survive the auction and the winning bidder will need to pay off that first lien amount to own the house with a clear title. A clear title is needed to resell the property. Furthermore, the winning bidder could be foreclosed on if the first lien amount remains unpaid after the foreclosure auction.


Researching the Title

The majority of foreclosure auctions are conducted by the lien holder in the first mortgage position, but you need to check if that’s the case for any property that interests you. And you need to check if the property has any current property tax liens recorded against it since those also survive the auction. You can find any liens recorded against a property at the local recorder’s office, through a local real estate agent or online through property data aggregators like RealtyTrac, which compiles lien & loan history information for auction properties nationwide. This research will allow you to determine the current state of the title and the position of the lien that will be up for auction.


You should enlist the help of a local real estate agent or real estate attorney if you’re not comfortable researching and interpreting the title information yourself. You can also ask the trustee in charge of the auction if the lien being foreclosed is in the first position or if it is "subject to" other liens.


If you’re interested in an auction property with property tax liens or other liens that will survive the auction, either avoid the auction altogether by working out a deal with the owner in default or make sure you account for those other liens in your bidding. Marrs recommends subtracting the amount of any liens that will survive the auction from 70 percent of the property’s market value to come up with your maximum bid amount. Here’s an example for a property with a market value of $200,000 and a property tax lien of $1,500:


$140,000 (70 percent of market value)

- $1,500 (property tax lien amount)

= $138,500 Maximum Bid


But if that same property had an additional lien of $50,000 not cleared by the foreclosure auction, your maximum bid would be a lot lower:


$140,000 (70 percent of market value)

- $1,500 (property tax lien amount)

- $50,000 (surviving lien amount)

= $88,500 Maximum Bid


You should be willing to invest the time and money it takes to assure once and for all that the property you are bidding on is worth what you think it is. Any investment you make in research is miniscule compared to the potential risk of assuming unknown liens on a foreclosure property.


Click here to search for bargain properties

Related Articles
- About Buying a Foreclosure Property East Amherst NY
No matter what type of property you’re planning to buy, good property research will help you recognize which properties represent smart investments and which do not. Remember, a little preparation before the sale can help you reap huge benefits.
- How to Buy Rental Property East Amherst NY
- Hidden Costs of Foreclosures East Amherst NY
- Real Estate Note East Amherst NY
- Real Estate Investing East Amherst NY
- How to Discover Property "Cover Up"s East Amherst NY
- Public Foreclosure Auctions East Amherst NY
- How to Find a Property Appraiser East Amherst NY
- How to Avoid Property Repossession East Amherst NY